www.oilinuganda.org OILIN UGANDA www.oilinuganda.org August 2012, Issue 2 OILIN UGANDA Everyone’s talking about oil. We capture the whole conversation. Ntoroko well No end to land wrangles disappoints | By Oil in Uganda Staff Land disputes in the oil-rich regions are often Chinese complex, but two things seem clear: oil discovery has encouraged opportunists, and many ordinary people are cursing. The first exploration well drilled in Uganda by the Chinese National Offshore Oil Corporation (CNOOC) A year ago, President Museveni tried to failed to find oil, and it appears - quell growing tensions in the oil-rich- that the ‘Kanywataba prospect’ Bunyoro region by banning further - will now be relinquished for pos land deals while a committee investi- sible future re-licensing by the gated the matter. No official commit Ministry of Energy and Mineral tee has yet reported—but investiga Development. tions by Oil in Uganda show ample Wandera Stephen by Photo evidence of continuing strife. The news was broken not by - CNOOC but in a July operational In Kasenyi, Buliisa District, villagers update from the Chinese compa complained that one Franco Kahwa, ny’s partner in Uganda, Tullow Oil. a local entrepreneur widely named According to the update: in speculative land deals, has bought community land from two men who “The Kanywataba exploration - had no right to sell it. Villagers who well (operated by CNOOC), in the protested the deal say they were at southern part of the Lake Albert - tacked by thugs and police. Rift Basin, commenced in May Eriakimi Kaseegu, LC 1 Chairman of Kasenyi, in Buliisa District, says he was beaten and arrested 2012 and results of drilling, wire- In Kigorobya, Hoima District, locals in May after contesting the unlawful sale of community land, including the site of Tullow Oil’s line logging and sampling show reported that a senior Internal Security Kasemene-3 well. that the reservoir is water bear - Organisation officer, Major Herbert ing. This wildcat well was drilled Asiimwe Muramagi, has acquired - 20km from the nearest well con 1,205 hectares of land from a Credit - trol. This was the last exploration and Savings Society whose original and in later developments. Longstand oil and gas logistical support company ing ‘squatter’ occupants of the land that was originally contracted by Heri well in the southern part of the ownership of the leasehold is bitterly- - basin with this exploration licence contested. Major Muramagi denied complain of intimidation and violence tage Oil and Gas, and whose services expiring in August.” buying rights to the land and sup from armed police and soldiers. have been retained by the China Na plied documents naming one Christine tional Offshore Oil Corporation. The Kanywataba area is part of the Further south, in Ntoroko District, a Mirembe as the buyer. Yet testimonies Semliki....Continued basin which on was Page explored 2 family accused local leaders of leasing Pages 3 and 4 carry more detailed from local people, including a parish to outside investors land that the Toro reports on these cases, while pages priest and even the Credit and Savings Kingdom gave their forefathers 60 Uganda.6 and 7 present a broader analysis of Inside this issue Society seller, all suggest that the Major years ago. Some of the disputed land the linkages between land and oil in was prominent both in making the deal was leased to Mineral Service Ltd, an 3 | The great land rush Alpha Oil fails to turn a profit | By Nick Young Three private entrepreneurs stood to make a 5 | Portraits from fortune by giving a small British oil explorer access refinery site to Uganda’s Albertine Rift. 6 | Oil, land and - dispossession - - In 2007, a little-known Uganda compa banker and Managing Director of the and a considerable portion of adjacent 8| Oil waste ny, Alpha Oil Ltd., obtained an explora Kisita Gold Mine in Mubende, and - land in Rukungiri and Kanungu dis tion licence over a large chunk of the - Hennie Mulder, a South African citizen tricts. dumped on Albertine Graben and stood to gain who, Mr. Kaijuka says, was a gold-min multi-million dollar profits from a pas ing associate of Mr. Mawanda’s. Asked why the Ministry of Energy, farmers land by then headed by Daudi Migereko, sive partnership with an international- These three co-directors each put in 33 should concede a licence over such a explorer—but those hopes evaporated- - 10| Cultural leaders early this year when the chosen part million Ugandan shillings (USD 18,500 large area to a company with minimal- at 2005 exchange rates) as start-up registered capital and no oil explora demand a share ner was swallowed by a bigger com pany that has abandoned the area. capital for Alpha. tion experience or expertise, Mr. Kai Oil in Uganda juka replied that it was because Alpha 11| What is Dutch Alpha was established at the end of In an exclusive interview Mr. Kaijuka - “had the capacity to attract” qualified 2005 by three entrepreneurs: Richard told that the Government international investors. disease? Kaijuka, a former Minister of Energy of Uganda gave the company an explo- ration licence for “the whole of Block “We were required to get technically and Mineral Development who later ....Continued on Page 2 held a senior position at the World 4,” covering those parts of Lake Ed competent, financially sound, proven Bank; Abbas Mawanda, a well- known ward that lie within Ugandan territory We capture the whole conversation. 1 www.oilinuganda.org OILIN UGANDA Ntoroko well disappoints Chinese Alpha Oil fails to turn a profit ....Continued from Page 1 ....Continued from Page 1 by Heritage in the early 2000s, with [international] partners for us to only moderate success. A large deposit proceed. Because we realised that we of methane was discovered, but it was needed deep pockets to get into this too contaminated with carbon dioxide business. On our own we couldn’t have to be commercially viable. - done anything.” Tullow later bought Heritage’s pros - Mr. Kaijuka says he approached pecting rights in the Albertine Graben several large companies, including and earlier this year sold equal inter Petrobras of Brazil, but they were not ests in their Ugandan assets to TOTAL interested, so Alpha instead made a and CNOOC. The Chinese company is deal with UK-based Dominion Oil. now acting as ‘operator’ of the fields in the south of Lake Albert, but all three Alpha agreed “to hand over the block companies will have an equal stake in [to Dominion] so that they could any eventual profits. technically carry the job.” A Uganda- registered subsidiary, Dominion It is not clear whether the three Uganda Ltd., would bear all the costs area.partners will seek an extension to the of exploration and keep 95 percent exploration licence in the Kanywataba of any eventual profits, while Alpha - would take 5 percent. In effect, Alpha’s cut would be a reward for getting Do exploration in the East African blocks billion.the area contained 316 million barrels Ms. Chai Wei, a Corporate Affairs - minion access to Uganda’s oilfields. representative for CNOOC in Uganda, - where it held rights. of oil, and possibly as much as 1.14 regretted that she was unable to com Alpha’s directors agreed to this on Exit Ophir - Nevertheless, Dominion managed to ment on the apparently disappointing April 27, 2007, authorising Mr. Kai carry out aero-magnetic surveys of performance of the Ntoroko explora juka to make the deal with Dominion. Oil in Uganda, the Lake Edward area in 2008 and, in Like Ophir, Octant declined to talk to tion well, or to elaborate on CNOOC’s The government signed a Production 2010, to drill one well, Ngaji-1. This but it seems possible future operational plans. Sharing Agreement with Dominion found “valuable geological data” that that their fundraising campaign bore three months later, on July 27, 2007. “confirmed the presence of excellent little fruit. She explained to Oil in Uganda that Mr. Kaijuka served for several months CNOOC has only recently established quality reservoir sands,” the company as the first Chairman of Dominion For, in May, Ophir closed down the an office in Kampala, and that media said.Enter But Ophir it didn’t find oil. Uganda‘Wildcatters’ Ltd. Dominion offices in Kampala and enquiries still have to be “handled by apparently relinquished the licence, Beijing.” In February 2012, Ophir Energy leaving several unanswered questions Far from having “deep pockets,” The company will, however, continue bought Dominion for US$ 180 million behind. Had Dominion fulfilled all its Dominion was a ‘wildcatter’—a small to develop the Kingfisher fields, where in a “friendly take-over.” work plan obligations? Was there in company that raises venture capital to commercial quantities of oil and gas - fact some dispute over the licence-- explore ‘high-risk’ areas. If they find Like Tullow Oil, the UK-based Ophir is have already been found.fisher fields, which Dominion had applied to renew oil, such firms usually sell on the pro a rising star in East African oil and gas where commercial quantities of oil and - in April, 2011, but which had not duction rights, for very large profits, to exploration. Both companies started gas have already been found. been formally renewed by the time of bigger players. out in much the same league as Do the Ophir take-over? Was it this that minion, but grew fast as a result of big Yet by 2007 the Albertine Graben- prompted Ophir to cut their losses and Oil in Uganda discoveries. Ophir was boosted by gas pull out, preferring to concentrate on was no longer ‘high risk.’ Ten years Oil in finds off Tanzania’s coast.